When an air conditioning system reaches the end of its life, its performance begins to suffer. If not properly maintained, it will eventually fail on you — undoubtedly in the middle of August when you need it the most.
This situation can be avoided by having a trained technician come out to your unit for regular maintenance. The technician will let you know when your system is reaching the end of its life, so you can plan for the purchase of a new system.
New air conditioning systems are an investment, improving the value of your home and maintaining the quality of life of your family. If you do not have the cash available to pay for the new system, then you will need to consider one of several financing options that may be available to you.
Option #1: Home Projects Credit Card
Companies such as Wells Fargo offer credit cards specifically designed for homeowners that need to fund a home project. These credit cards often come with special financing programs. For example, there may be a promotional period where you are not charged any interest as long you pay it off within a certain time period.
These often look and feel like a normal credit card, with a revolving line of credit that you can pay down and then use again for other projects. As with most credit cards, the minimum payment will be low (usually 2% of the balance) and you will have many years to pay it off.
Also, a reminder that if you do not pay off the balance by the end of the promotion period, then the credit card company will add back in all of the interest that had been deferred, causing the balance to go up quite a bit.
This credit card option may not be available to buyers with a poor credit history.
Option #2: A Typical Credit Card
The Home Projects card discussed in Option #1 often has the advantage of a special promotion period. Example: “No interest if paid-in-full within 18 months”.
If you are not interested in this special promotion, perhaps because you know you will never have it paid off by the promotion end date, then you may want to consider any other credit card on the market. Or perhaps you already have one or more credit cards in your wallet that can be used for the air conditioning purchase.
Individuals that qualify for a credit card with rewards may reap a lot of reward points by using the card for an HVAC installation.
Option #3: Personal Loan
Visit your bank and see what options they have available to you. Many banks have a personal loan designed for home project use. These loans have the advantage of having lower interest rates than a credit card.
The downside to these loans is that you often will not get any interest-free promotional period. Also, the minimum payments may be higher because the bank wants you to pay it off in a specific time-frame. These loans may not be a revolving line of credit, meaning you only get to use the loan money once and you cannot pay it down and use it for additional purchases.
Option #4: Home Equity Loan
With the real estate market prices rising recently, a home equity loan may be a great option for you. After all, the installation of a new HVAC system is an investment in your home’s value, so it may make sense to use a home equity loan to fund it.
A home equity loan usually offers a low interest rate, a longer payment period, and low monthly payments. This may be a viable option for folks with imperfect credit.
The downside is that getting a home equity loan can be a long and stressful process, with a lot of paperwork to be sent into the bank, home appraisals, etc. And a reminder, you could lose your home via foreclosure if you don’t pay the home equity loan.
Option #5: Various Government Programs
Homeowners who have a federally-backed mortgage may qualify for federal programs that can help pay for an HVAC upgrade. To address climate change, the Federal government sometimes offers loans and tax credits for systems that improve a home’s energy efficiency. There may also be programs designed to help low-income homeowners.
These programs are always coming and going, so we won’t get into a lot of specifics, but two examples are:
Option #6: 401K Borrowing
Often recommended as a last resort, there are many Americans who pay for home renovations by borrowing against their retirement plan at work. Your ability to borrow from your plan depends on the rules at your employer, so you will need to contact your 401k provider. These funds generally must be repaid within five years.
You can also take an early withdrawal from your 401K or IRA, just realize doing so may cause tax penalties. Do your research before choosing this option.
Option #7: Get A Co-Signer
Lastly, we want to mention, if you are struggling to finance because of poor credit history, then you may want to consider having a relative or friend add themselves as a co-signer on the loan application. This will make the other party liable for your debt and a failure to pay the bill could damage their credit as well.
Option #8: A Mix Of All The Above
Sometimes financing a large air conditioning requires some creativity, especially if you have less than stellar credit history. A quality HVAC company will patiently partner with you to spread the payment across several of the above options.
Financing With Carolina Climate Control
Carolina Climate Control in Charleston is a top-rated air conditioning service company in South Carolina’s Lowcountry. Locally owned and operated, we provide customers the highest quality air conditioning installation and repair.
To help customers purchase their new HVAC system, we partner with Wells Fargo to offer the Home Projects credit card. Contact us today to learn about special financing options and promotions we have on Trane equipment.
